How to Implement a Private Payer Reimbursement Strategy

1
How to Implement a Private Payer Reimbursement
Strategy

• Barbara Grenell
• Preferred Health Strategies
• Harvard Medical Device Congress
• March 27, 2008

2
When and How to Develop a Reimbursement Strategy

• The short answer is as soon as possible
• Now well explain the how and why

3
Why is it so important?

• Reimbursement is critical to the success of a
  product
• We have had many clients who have developed a
  wonderful device only to find there was no
  coverage or inadequate reimbursement for the
  device, resulting in a wonderful device no one
  wanted to buy!
• Simply put, reimbursement will determine whether
  or not providers will be willing to buy the
  product

4
What needs to be addressed in the reimbursement
strategy?

• The reimbursement strategy should address each of
  the relevant target markets
• Medicare
• Medicaid
• Commercial (including unions self-insured
  companies)
• Prior to making a purchase, providers will want
  to know what they can expect in terms of
  reimbursement in each of these markets

5
How do providers make a purchase decision?

• Providers will evaluate
• The amount of time it takes to perform the
  procedure
• The opportunity cost of seeing another patient
• The sales price
• The administrative impact of the device on their
  practice (clinical and administrative staff time)
• Their bottom line is what is the price of this
  device relative to my expected return?

6
What do payers look at?

• How much will the device/procedure cost in terms
  of claims expense?
• Does this procedure substitute for something that
  is more costly?
• Will it reduce other health care costs in the
  near term (e.g. hospital admissions)?
• Will it reduce future costs through early
  detection, etc.?
• Does the clinical literature support the
  manufacturers claims regarding efficacy, safety
  and cost savings?

7
When do we begin developing the reimbursement
strategy?

• It is really never too soon to begin developing
  your reimbursement strategy
• At least 12 months before product launch, you
  should begin to identify all the potential
  reimbursement issues including
• Coding (is there an existing code or do we need a
  new one?)
• How it will be reimbursed (e.g. through a
  separate procedure rate, bundled into an existing
  rate, etc.)
• Does the existing clinical literature enable us
  to make the case to the payers?
• Identify the gaps and develop an action plan for
  each issue

8
When do we begin developing the reimbursement
strategy?

• At least, six months before launch
• Begin researching reimbursement levels for
  comparable products
• Begin informal discussions with the payers to see
  how they are likely to react
• Determine if additional data will be needed to
  support your case
• Begin developing the value story
• Collect all the relevant clinical literature that
  will be needed to support the request for
  coverage
• Develop the economic argument in support of the
  device or service

9
When do we begin developing the reimbursement
strategy?

• At least six months before launch
• Incorporate the reimbursement information into
  the final pricing strategy - make sure pricing
  and reimbursement are consistent
• Develop a strategy for educating field staff and
  your customers on reimbursement issues

10
When do we begin developing the reimbursement
strategy?

• Beginning three months before launch
• Formalize the information that will be presented
  to the payers including the clinical literature
  and economic data
• Implement the provider strategy, making sure you
  have a way to respond to inquiries and resolve
  issues
• Continue working with the payers to ensure that
  their coverage and reimbursement policies result
  in a favorable outcome

11
When do we begin developing the reimbursement
strategy?
Research comparables Initiate informal
payer discussions Finalize pricing
Finalize reim- bursement strategy
Identify issues Develop action plan
Implement provider strategy Meet with
payers Educate field staff Resolve billing
issues
12
What to do if, despite your best efforts, the
payers say NO

• DONT PANIC!

13
What to do if, despite your best efforts, a
Private Payer says NO

• Formal Appeals Process
• In the case of the private payers, there
  generally is no formal reconsideration process
  for new technology reviews
• The manufacturer will have to work with the payer
  and its Medical Director(s) through an informal
  process to present the evidence needed to make
  the case

14
What to do if, despite your best efforts, a
Private Payer says NO

• Individual patients who have been denied prior
  authorization for a specific procedure can appeal
  to the private payer Each payer has its own
  internal appeals process that the patient must
  follow
• Once the internal appeals process has been
  exhausted, most States require that there be an
  external process as well, which is generally
  handled by an outside independent review
  organization
• An affirmative decision for a specific patient
  does not mean that the coverage decision will be
  reversed but it does begin to build the case for
  future discussions with the payer

15
What to do if, despite your best efforts, a
Private Payer says NO

• Informal appeals process
• The first step is to try and obtain as much
  information as possible as to why a negative
  decision was issued
• If possible, speak directly to the Medical
  Director at the relevant payer
• Enlist the support of the provider community in
  contacting the Medical Director to explain why a
  change is needed

16
What to do if, despite your best efforts, a
Private Payer says NO

• Most likely, you will be told that the literature
  was not adequate to support an affirmative
  coverage position
• If this is the case, have your clinical experts
  develop a point-by-point response
• Provide the Medical Director with additional
  information that might not have been available
  prior to rendering their decision
• If you cannot convince them, consider the need
  for additional studies designed to address the
  payers specific concerns

17
What to do if, despite your best efforts,
Medicare says NO

• Medicare has a formal process in place for
  reconsideration of both National Coverage
  Determinations (NCDs) and Local Coverage
  Determinations (LCDs)
• The only opportunity for a manufacturer to
  overturn an NCD (which is binding on all the
  carriers) is to submit a reconsideration request

18
What to do if, despite your best efforts,
Medicare says NO

• The reconsideration request will only be
  considered if it is accompanied by additional
  medical or scientific evidence that was not
  considered as part of the initial review or if
  you are asserting that the data was
  misinterpreted
• The reconsideration process takes about 90 days
  and the existing NCD remains in effect during
  this period
• Medicare beneficiaries who have been denied a
  service have an additional opportunity to appeal,
  initially to the Departmental Appeals Board and
  ultimately through the Federal district court

19
What to do if, despite your best efforts,
Medicare says NO

• If you are dissatisfied with an LCD,
  manufacturers can submit a request for a
  reconsideration
• As with an NCD reconsideration, the information
  submitted will be held to the same standard that
  was applied for the initial determination
• The carrier has 30 days to determine if the
  request is valid if so, they have up to 90 days
  in which to make a decision on whether a revision
  is warranted

20
What to do if, despite your best efforts,
Medicare says NO

• In our experience, carriers are willing to
  entertain additional information submitted
  through the reconsideration process and will, in
  fact, make changes if deemed appropriate
• It is also extremely helpful if you can engage in
  a dialogue with the local carrier Medical
  Director and if you can enlist the support of
  providers who can also request a reconsideration

21
What to do if, despite your best efforts,
Medicare says NO

• Medicare beneficiaries who have been denied a
  service because of an LCD can also file an LCD
  challenge
• The challenge is reviewed by an Administrative
  Law Judge (ALJ)
• If the ALJ rules in favor of the beneficiary, it
  may trigger a change in the policy
• If the ALJ upholds the original policy, the
  beneficiary may appeal to a Departmental Appeals
  Board and ultimately the courts

22
Summary/Conclusion

• The key component in your reimbursement strategy
  is to make sure that the information is in place
  to convince the Medical Directors that the new
  technology is
• Safe
• Has an impact on clinical outcome as documented
  in peer reviewed, scientific literature and
• Short of a significant leap in outcome or
  quality, will not result in additional costs
• Without the supporting evidence, it will be very
  difficult, if not impossible to implement a
  successful reimbursement strategy